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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-01428
METALINE MINING & LEASING COMPANY
(Exact name of registrant as specified in its charter)
State of Washington 91-0684860
______________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 West Main Avenue, Suite 714
Spokane, Washington 99201-0677
__________________________________________ _______________
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 509-455-9077
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for at least the past
90 days. Yes (X) No ( )
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 14,555,668
Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
*****************************************************************************
SUBMISSION PAGE: 1 OF 12
<PAGE>
PART 1 FINANCIAL INFORMATION
a) Financial Statement of Registrant
INDEX
Balance Sheet (Unaudited) as of September 30, 1998 and
December 31, 1997
Statement of Income and Retained Earnings (Unaudited) for the
three and nine months ended September 30, 1998 and 1997
Statement of Cash Flows (Unaudited) for the nine months ended
September 30, 1998 and 1997
Notes to the Financial Statements (Unaudited)
The financial statements of the Registrant included herein have been
prepared, without audit, pursuant to the rules and regulations of the
Securities Exchange Commission. Although certain information normally
included in financial statements prepared in accordance with generally
accepted accounting principles has been condensed or omitted, the
Registrant believes that the disclosures are adequate to make information
presented not misleading. It is suggested that these financial statements
be read in conjunction with the financial statements and the notes thereto
included in the Annual Report on Form 10-K of the Registrant for its year
ended December 31, 1997.
The financial statements included herein reflect all adjustments (consisting
only of normal recurring accruals) which, in the opinion of management, are
necessary to present a fair statement of the results for the interim periods.
The results for interim periods are not necessarily indicative of trends or
of results to be expected for a full year.
/s/ Robert Moe & Associates
SUBMISSION PAGE: 2 OF 12
<PAGE>
METALINE MINING & LEASING COMPANY
(A Development Stage Company)
BALANCE SHEET (Unaudited)
SEPTEMBER 30, 1998 AND DECEMBER 31,1997
<TABLE>
ASSETS
SEPT. 30, 1998 DEC. 31, 1997
______________ _____________
<C> <S> <S>
CURRENT ASSETS
Cash in bank $ 6,085 $ 8,490
Composite cash fund 1,674 1,613
Money market fund 396,345 -
Certificate of deposit 101,223 -
Note Receivable 5,000 5,000
______________ _____________
Total current assets 510,327 15,103
______________ _____________
SECURITIES 13,719 -
MINING PROPERTIES 4,043 4,043
______________ _____________
Total assets $ 528,089 $ 19,146
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 267 $ 21,932
Deposit - 9,784
______________ _____________
Total Current Liabilities 267 31,716
______________ _____________
STOCKHOLDERS' EQUITY
Common stock - No par value 15,000,000
shares authorized 7,277,834 - 1998;
7,277,834 - 1997; issued and outstanding 145,072 145,072
Paid in capital 287,411 287,411
Unrealized loss, marketable securities (5,773) (5,773)
Retained earnings (deficit) accumulated
during the development stage 101,112 (439,280)
______________ _____________
Total Stockholders' Equity 527,822 (12,570)
______________ _____________
Total Liabilities and Stockholders' Equity $ 528,089 $ 19,146
============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements
SUBMISSION PAGE: 3 OF 12
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METALINE MINING & LEASING COMPANY
(A Development Stage Company)
STATEMENT OF INCOME AND RETAINED EARNINGS (Unaudited)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
____________ ____________ ____________ ____________
<C> <S> <S> <S> <S>
INCOME
Dividend & interest income $ 6,108 $ 31 $ 7,629 $ 93
____________ ____________ ____________ ____________
Total Income 6,108 31 7,629 93
EXPENSES
Directors' fees - 720 300 6,320
Professional fees 300 - 19,404 -
Office expense 34 16 350 83
Taxes, licenses, and fees - 24 561 272
____________ ____________ ____________ ____________
Total expenses 334 760 20,615 6,675
____________ ____________ ____________ ____________
INCOME (LOSS) BEFORE OTHER
INCOME AND (EXPENSES) 5,774 (729) (12,986) (6,582)
OTHER INCOME AND (EXPENSES)
Sale of securities - - 711,377 -
____________ ____________ ____________ ____________
Total Other Income - - 711,377 -
____________ ____________ ____________ ____________
INCOME (LOSS) BEFORE
PROVISION FOR FEDERAL
INCOME TAXES 5,774 (729) 698,391 (6,582)
PROVISION FOR FEDERAL INCOME
TAXES 2,000 - 158,000 -
____________ ____________ ____________ ____________
NET INCOME (LOSS) 3,774 (729) 540,391 (6,582)
RETAINED EARNINGS (DEFICIT)
Beginning of period 97,338 (1,519) (439,279) 4,334
____________ ____________ ____________ ____________
End of period $ 101,112 $ (2,248) $ 101,112 $ (2,248)
============ ============ ============ ============
INCOME (LOSS) PER SHARE NIL NIL NIL NIL
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
SUBMISSION PAGE: 4 OF
12
<PAGE>
METALINE MINING & LEASING COMPANY
(A Development Stage Company)
STATEMENT OF CASH FLOWS (Unaudited)
<TABLE>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
______________ _____________
<C> <S> <S>
CASH FLOWS PROVIDED (USED) IN OPERATING
ACTIVITIES:
Net income (loss) $ 540,391 $ (6,582)
Non cash items included in income:
Stock issued for services - 6,320
Increase (Decrease) in current assets
and liabilities:
Accounts payable from operation (31,448) (1,500)
______________ _____________
Net cash (used) by operating activities 508,943 (1,762)
______________ _____________
CASH FLOWS PROVIDED (USED) IN INVESTING
ACTIVITIES:
Received from sale of Kreugerrands - 2,220
Purchase of Krugerrands and Silver (13,719) -
______________ _____________
Net cash (used) by investing activites (13,719) 2,220
______________ _____________
NET INCREASE (DECREASE) IN CASH 495,224 458
CASH AT BEGINNING OF PERIOD 10,103 1,792
______________ _____________
CASH AT END OF PERIOD $ 505,327 $ 2,250
============== =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash and cash equivalents
Cash in bank $ 6,085 $ 657
Composite cash fund 1,674 1,593
Money market fund 396,345 -
Certificate of deposit 101,223 -
______________ _____________
$ 505,327 $ 2,250
============== =============
</TABLE>
The Company has adopted Statement of Financial Accounting Standards
No. 95, Statement of Cash Flows. For purposes of this statement,
short-term investments which have initial maturity of ninety days or
less are considered cash equivalents.
The accompanying notes are an integral part of these financial statements
SUBMISSION PAGE: 5 OF 12
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METALINE MINING & LEASING COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1 - ORGANIZATION
The Company is currently in the development stage and is currently
negotiating with major mining companies for development of all of their
properties.
The Company was organized on December 14, 1927. The Articles of
Incorporation stated the term of the corporation's existence shall be fifty
years. The expiration date of the corporation's existence was
December 13, 1977.
On May 12, 1977, Spokane Superior Court appointed a trustee to represent
the missing shareholders at a special meeting of shareholders held on May 17,
1977. At the special meeting the shareholders and the trustee unanimously
approved a resolution to enable the corporation to amend its Articles of
Incorporation to extend the corporate life perpetually.
2 - ACCOUNTING POLICIES
A. The Company's records are maintained on the accrual method of
accounting.
B. The Company capitalizes all acquisition and exploration costs on all
non-operating mining properties and mineral rights for accounting and
income tax purposes. Upon commencement of operations, the
capitalized costs will be amortized based on proven or probable
reserves by the unit of production method so that each unit produced
is assigned a pro rata portion of the unamortized acquisition costs.
C. Capitalized costs are charged to operations when title to the
property has expired or when management feels the properties are not
economically feasible to develop or hold for future development.
D. Accounting Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
E. Other Comprehensive Income. For the period ended September 30, 1998,
the Company did not have other revenues, expenses, gains and losses
that require disclosure under SFAS No. 130 as other comprehensive
income.
F. Concentration of Credit Risk. Financial instruments that potentially
subject the Company to significatn concentrations of credit risk
consist principally of cash investment. As of September 30, 1998,
the Company had cash with Wells Fargo Bank with a combined balance
of $488,309, which is $388,309 in excess of the FDIC insured amount.
SUBMISSION PAGE: 6 OF 12
<PAGE>
METALINE MINING & LEASING COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
3 - MARKETABLE SECURITIES
At December 31, 1997, the Company owned 1,477,239 shares of Metaline Contact
Mines whose asset carrying value has been written off. Metaline Contact
Mines is owned 51% by the Bunker Hill Company, a subsidiary of Gulf Resources
Chemical Corporation. These shares were sold during 1998 and the Company
received a total of $711,377.
The Company owned 25,000 shares of Capitol Silver Mines, Inc. Capitol Silver
Mines, Inc. is in the development stage and as of this date is unproductive.
The Company owned 31,151 shares of Carson Industries Corporation. Carson
Industries Corporation is currently involved in oil and gas.
The Corporation has adopted Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. SFAS No. 115 establishes generally accepted accounting
principles for the financial accounting and measurement and disclosure
principles for (1) investments in equity securities that have
readily determinable fair market value and (2) all investments in debt
securities. The change had no effect on prior years' results. All of the
marketable securities held by METALINE MINING & LEASING COMPANY consists of
securities "available-for-sale" as defined by SFAS No. 115. The basis on
which cost is determined in computing realized gain or loss is the specific
identification method.
The following information is as of September 30, 1998 and December 31, 1997:
<TABLE>
1998 1997
____________ ____________
<C> <S> <S>
Aggregate fair value of marketable securities $ - $ -
Gross unrealized holding losses 5,773 5,773
Amortized cost basis 5,773 5,773
</TABLE>
Changes in marketable securities for the nine months ended September 30,
1998 and the twelve months ended December 31, 1997 and 1996 are as follows:
<TABLE>
1998 1997
____________ ____________
<C> <S> <S>
Cost as of January 1, $ 5,773 $ 5,773
Purchase of Krugerrands 13,719 -
Unrealized loss (5,773) (5,773)
____________ ____________
Fair market value $ 13,719 $ -
============ ============
</TABLE>
SUBMISSION PAGE: 7 OF 12
<PAGE>
METALINE MINING & LEASING COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
4 - MINING CLAIMS
In July of 1985 the Company purchased two units of Pondera Partners, LTD., a
drilling project located in Teton County, Montana. Total cost for the 5.714%
interest was $12,000. The Partnership has elected to treat intangible
drilling costs as a current expense deductible in the year in which paid or
incurred.
PARTNERSHIP INTERESTS
December 31, 1997 and September 30, 1998
<TABLE>
Ordinary
Beginning Income Distri- Ending
Capital (Loss) butions Capital
__________ __________ __________ __________
<C> <S> <S> <S> <S>
Pondera Partner Ltd., 1997 $ 4,116 $ (73) $ - $ 4,043
__________ __________ __________ __________
Balance at December 31, 1997 $ 4,116 $ (73) $ - $ 4,043
========== ========== ========== ==========
Pondera Partner Ltd., 1998 $ 4,043 $ - $ - $ 4,043
__________ __________ __________ __________
$ 4,043 $ - $ - $ 4,043
========== ========== ========== ==========
</TABLE>
5 - COMMON STOCK
At December 31, 1997, the Company's independent transfer agent reported that
7,277,834 shares of common stock were outstanding.
The Articles of Incorporation were amended December 31, 1983 to reclassify
shares and reduce capital to $299,000. The capitalization of the Company
shall be divided into 15,000,000 shares of no par value common non-assessable
stock. None of these shares shall have preemptive rights. Each and every
share of stock shall have the same rights and privileges as those enjoyed by
each and every other share.
The Board of Directors of Metaline Mining & Leasing Company passed
unanimously to compensate the directors for services rendered in the form of
Metaline Mining & Leasing Company Stock. The Board of Directors were each
issued shares of Metaline Mining & Leasing Company Stock for services
performed. During 1997 1,464,000 shares were issued to Directors for
services. The shares authorized by the Board of Directors to compensate
Directors for 1995 and 1996 were issued during 1997. The issue of stock for
services is valued using the stock quotation price on the date of issue less
50% due to the fact that it is restricted stock.
On December 30, 1997 options to acquire 500,000 shares of Metaline Mining &
Leasing Co. common stock were exercised by Greg Lipsker and William R. Green
(both directors of the Company). The exercised price is $.005 per share,
payable by a one year non-recourse promissory note bearing interest at 8% per
annum.
SUBMISSION PAGE: 8 OF 12
<PAGE>
METALINE MINING & LEASING COMPANY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
6 - FEDERAL INCOME TAXES
On June 5, 1998, the Company made a Federal Income Tax deposit in the amount
of $158,000 to cover the estimated tax liability for 1998.
SUBMISSION PAGE: 9 OF 12
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
The Registrant has no revenues from operations. It's only income has been
derived from the sale of an investment and interest earned on the proceeds
of that sale.
The Registrant's plan of operation for the next twelve months will consist of
attempting to acquire an interest in a business opportunity. Due to the
Registrants limited assets and its inability to raise additional financing
due to the lack of a market for it's Common stock, it is anticipated that any
such acquisition would be a "reverse take-over" accomplished through a merger
or share exchange. In such event, the Registrant's existing shareholders
would likely become minority shareholders in the surviving entity. The
Registrant is not currently evaluating any specific acquisition
opportunities.
The Company does not currently have any employees and anticipates utilizing
the services of consultants to accomplish it's plan of operation. The
Company currently has sufficient resources to meet it's financial obligations
for the next twelve months.
PART II
ITEM 1 LEGAL PROCEEDINGS
NONE
ITEM 2 CHANGES IN SECURITIES
NONE
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5 OTHER INFORMATION
On November 18, 1998, the Registrant sold 7,277,834 shares of it's
Common Stock to Mr. Albert Zlotnick for an aggregate price of $511,799.
The sales price was based upon the Registrants net assets at September 30,
1998 less provisions for income taxes payable and the value of the
Registrant's investment in a non-producing drilling project (see Note 4 to
the Financial Statements).
Mr. Zlotnick has been appointed to fill a vacancy on the Board of Directors
and has been appointed Chairman of the Board. Mr. Zlotnick has the right to
nominate one additional director to full the remaining vacancy on the Board
of Directors.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
NONE
SUBMISSION PAGE: 10 OF 12
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SIGNATURES
*************************************************************************
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
METALINE MINING & LEASING COMPANY
(Registrant)
By: /s/Gregory B. Lipsker Date: November 20, 1998
__________________________________________
GREGORY B. LIPSKER, President
(Principal Executive Officer)
By: /s/ Eunice R. Campbell Date: November 20, 1998
__________________________________________
EUNICE R. CAMPBELL, Secretary/Treasurer
(Principal Financial Officer)
SUBMISSION PAGE: 11 OF 12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements for Metaline Mining & Leasing Company at September
30, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 505,327
<SECURITIES> 13,719
<RECEIVABLES> 5,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 510,327
<PP&E> 4,043
<DEPRECIATION> 0
<TOTAL-ASSETS> 528,089
<CURRENT-LIABILITIES> 267
<BONDS> 0
0
0
<COMMON> 145,072
<OTHER-SE> 382,750
<TOTAL-LIABILITY-AND-EQUITY> 528,089
<SALES> 0
<TOTAL-REVENUES> 6,108
<CGS> 0
<TOTAL-COSTS> 334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,774
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,774
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
